from the get-crackin' dept

Having followed the saga of Prenda Law over the past few years, one thing has become clear: John Steele really loves the "I know you are, but what am I" form of legal argument, in which whatever he's accused of, he aggressively accuses his accuser of being guilty of the same. It's a sort of faux macho move, in which every attack on him is met with an equally or more aggressive attack. To date, the strategy has failed badly, but it seems that Steele just can't let go of this kind of approach. In the latest round of the Anthony Smith case, Steele appears to be trying on a variant of that aggressive posture, taking on the very serious and direct accusations made against him (including those by multiple federal judges) and mocking them, by asking another court rhetorically, "what, do you really think I'm guilty of all these crazy things?" when the answer to that question may very well be yes.

At issue is the continuing fight over getting Steele and his collaborators, Paul Hansmeier and Paul Duffy, to actually pay up for their abuse of the legal process. Last we checked in on this particular case, the district court was finding them in contempt and piling more onto the money they would need to pay, while the appeals court does not appear to be impressed by Team Prenda's arguments, clearly calling out the "shell games" that Prenda and associated entities were playing.

While aspects of the case have been stayed during the appeal, other aspects are moving forward, including Smith's lawyer continuing to push for discovery on the actual assets of Steele, Hansmeier and Duffy. As you may recall, despite being required to provide such information, they did so in a questionable manner. As Judge David Herndon pointed out:

The Court finds that plaintiff's counsel has not met its burden. They submitted incomplete, and to say the least suspicious, statements of financial condition. Attached to each statement was a letter from their certified public accountant ("CPA"). In these letters, the CPA indicates a departure from generally accepted accounting principles. He further notes that plaintiff's counsel elected to omit substantially all of the disclosures required by generally accepted accounting principles. The Court finds these statements insufficient to establish plaintiff's counsel's inability to pay.

Since then, Smith's lawyer, Jason Sweet of Booth & Sweet, has continued to push for determining the financial position of the three individuals here. There's a sealed document which apparently hints at some shady financial dealings, but it appears to be making Steele very angry. While Paul Duffy filed a pretty empty opposition saying that he has no offshore accounts, Steele went into full on, ultra-aggressive "who me?" defensiveness in response, leading to some incredible statements, considering what multiple courts have already said about them. The classic part has to be this:

For this Court to find any act of Prenda should be attributed to Steele, the Court would have to believe that Steele lied to multiple federal judges without getting caught, committed massive tax fraud without the IRS finding out, and proactively broke into the Illinois Secretary of State’s corporate records database to hide his ownership of Prenda Law, all because of the remote chance that years later a federal judge might sanction Prenda Law for $261,000.

Except... of course, multiple judges have already claimed that Steele and the others have lied, including in this very case. In the original ruling in this case, Judge Patrick Murphy directly called out Steele for lying, saying: "These men have shown a relentless willingness to lie to the Court on paper and in person." He furthermore highlighted how it was quite clear that Steele was directly involved in Prenda, which Steele is now denying yet again. And no one is claiming he hacked into the corporate records database (though, now that he's denied it, it almost makes you wonder...), but that he was clearly in control of Prenda and received much of the money that went into Prenda.

As for the issue of the IRS, well, last we checked, at least one judge, Otis Wright, has referred their conduct to the IRS, and there are at least some indications that an investigation is ongoing. And while no one thinks they set up this shell game specifically to avoid this particular ruling, it's not difficult to see that they did so to try to avoid a series of similar court rulings, after Prenda's initial approach started getting regularly shot down in court.

Steele's response also ratchets up the ridiculous rhetoric in describing the copyright trolling shakedown business, which they copied from a bunch of other firms:

Steele and his partner, Paul Hansmeier (”Hansmeier”) were early pioneers in catching thieves and hackers who engaged in stealing copyrighted works and other computer related misdeeds, including computer hacking and copyright infringement.

Except, of course, they were neither pioneers, nor were they catching "thieves" or "hackers." Rather, by all accounts, they set up a honeypot site, uploaded their own content to it, shared it on file sharing sites, and then used the IP addresses of those who followed the release that they themselves put online, to shake them down with lawsuits and demands for settlement. The evidence on this is fairly overwhelming.

Steele tries to argue away the "oddities" the court noted in the filings made by the CPA they hired this way:

At the hearing, no reference was made to the GAAP, the Generally Accepted Accounting Rules, a set of standards designed for the financial reporting of corporations, not individuals. Steele submitted his financial statement as directed. Steele’s submissions were accurate, and no filing since has disproved any aspect of Steele’s statement

If he thinks that this will get him out of the fact that the CPA "elected to omit substantially all of the disclosures required" I would imagine he's got another thing coming.

Steele, also tries to angrily argue away the infamous Brett Gibbs spreadsheet that revealed the revenue of Prenda Law, and how 70% of it went to both Steele and Hansmeier, who have long denied being associated with that firm. Steele argues that this spreadsheet was made by Gibbs, as opposed to (as Gibbs has noted) made by Prenda and shared with Gibbs via a shared Dropbox account.

It appears that Mr. Gibbs created some accounting sheet of Prenda Law finances for some period of time prior to this case, and thus is irrelevant. Steele has no personal knowledge of Mr. Gibbs’ accounting records, methodology, or how Mr. Gibbs created his documents. According to Mr. Gibbs himself, he doesn’t either, and claims he doesn’t even know how his document came into existence. Such a document hardly comports with the Federal Rules of Civil Procedure governing admissible evidence.

He focuses on the fact that the spreadsheet is not admissible. Of course, his partner, Hansmeier, having argued basically the same thing in the past, has also suggested that the facts of the document are accurate, noting (incorrectly) that the document supports Steele/Hansmeier's position and that it was "stolen."

Related to all of this, Steele appears to still be playing games. In a separate filing, Sweet details how Steele took it upon himself to (incorrectly) inform various parties that Sweet had subpoenaed, that the stay on one part of the case meant those subpoenas were withdrawn as well. Except that they're part of a separate process, which is still ongoing. Sweet asked Steele to confirm that Steele had gone back to those third parties, and admitted that he was wrong in interfering with the discovery process. Steele did not do so, but rather sent one of his snarky emails about how he promises that he "will address your most recent round of subpoenas as appropriate."

It's been a while since Steele has done this kind of thing, but it's the same old John Steele, cocky until the very end, even as all of the evidence is against him. It reminds you of a little kid who has been caught doing something wrong but figures if he just keeps denying it over and over again, buying himself time, there will be some way to get out of it all.

from the oops dept

Remember back when Prenda sued everyone for defamation? The lawsuit targeted Alan Cooper (whose name multiple courts have now said Prenda forged) and his lawyer, Paul Godfread (while insisting the lawsuit was unrelated to the lawsuits Cooper brought against them), but also went after a bunch of blog commenters for anonymous comments they claimed were defamatory. Prenda even tried to subpoena Automattic (makers of Wordpress) to get the IP address of pretty much everyone who visited either fightcopyrighttrolls.com or dietrolldie.com. That subpoena failed. As did the lawsuit. Badly.

U.S. District Judge John Darrah at a brief status hearing today granted the motion for sanctions that defendants Paul Godfread and Alan Cooper filed this past fall against Prenda and Paul Duffy, who served as the firm’s sole officer before it dissolved and now serves as its attorney in the matter.

There's still some effort to go, as the lawyers for Godfread and Cooper, Erin Russell and Jason Sweet (whose names you may recognize for other work they've done bringing down Prenda) have to submit an itemized fee list, followed by Duffy's response, and then the follow up response from Russell/Sweet. A hearing will then be held in June, meaning there's still plenty of time. However, it looks like another lump sum will be added to Prenda's large and growing tab.

from the getting-expensive dept

Last week, Team Prenda took another big loss and got smacked around by another judge ordering them to pay even more in attorneys' fees. The list is really starting to add up. This case, which involved Prenda representing porn producers Lightspeed (rather than one of their own shell operations), had been sitting out there for a while, but it was one of the cases that involved Prenda trying to route around the trouble they'd been having with copyright claims by arguing a computer hacking violation instead. And, on top of that, it involved Prenda going after AT&T and Comcast for refusing to just blindly hand over the names of people attached to the IP addresses listed. Back in April, Prenda had filed a ridiculous response to lawyers Booth Sweet asking for attorneys' fees. Given everything that's come out (and, honestly, much of which had already been public) the hubris of Prenda's Paul Duffy is impressive. In the lawsuit he attacks Booth Sweet arguing that they "routinely file baseless motions for attorneys' fees in hopes they will eventually get lucky." Of course, Booth Sweet's track record is pretty strong here, and while it took a few months, the judge in the case, Patrick Murphy, realized that it was Team Prenda who was really playing games:

The litigation smacked of bullying
pretense.

Elsewhere, the judge notes that awarding attorneys' fees is appropriate "when
counsel acted recklessly, raised baseless claims despite notice of the frivolous nature of these
claims, or otherwise showed indifference to statutes, rules, or court orders," suggesting that he sees Team Prenda's actions as fitting into those categories.

At this point, all of these attorneys' fees wins are more or less meaningless. It's doubtful that any of them will get paid (though, there does appear to be money somewhere...). The main event, a more thorough investigation and possible criminal charges against Team Prenda still await -- but those things take time. Still, that isn't stopping Team Prenda from pulling their standard response to these kinds of rulings against them, pulling the same failed tricks out of their increasingly frayed trick bag.

In this case, it involves Paul Hansmeier claiming "what? who, me?" in response. He notes that, while he was involved in the case at some point, briefly, this was really a Paul Duffy case all along, and he, Hansmeier, along with his partner in crime John Steele, simply had no idea this case was even still going on, let alone that they might be on the hook for potential attorneys' fees. As unbelievable as that might be (and potentially a process violation -- since Hansmeier is no longer a lawyer in this matter, he shouldn't make filings in the case without first getting permission from the court), the bigger issue is that this is the first time I can recall where Hansmeier and Steele appear to pretty clearly be throwing Paul Duffy under the bus.

If you haven't been paying attention, Team Prenda has been gradually dwindling as the main players have gradually thrown the redshirts under the bus one by one. Brett Gibbs went down first, but Mark Lutz was a recent addition to the under-the-bus crew. But, from the beginning, many have argued that Duffy was the patsy for Steele and Hansmeier, and here's a case where Hansmeier appears to be leaving Duffy out to dry on yet another failed case. You'd think that Hansmeier would be more careful, because if there's anyone who likely knows all the details of how Prenda is setup, it would be Paul Duffy. As they say, never throw anyone under the bus who might take you with them. Hansmeier and Steele seemed to miss that with Brett Gibbs, and now they're repeating it with Duffy. As for Lutz, he still seems to be completely MIA, which seems increasingly suspicious... especially since Hansmeier insisted that Lutz would appear shortly to answer questions the court had asked.